GCC Trade Realignment: From the U.S. and EU Toward China

Econovis Team

Executive Summary

The Gulf Cooperation Council (GCC) has undergone a major realignment in global trade, shifting away from the United States and the European Union toward China. By 2024, GCC-China trade had reached $288 billion, exceeding combined GCC trade with the EU ($173 billion) and the U.S. ($77 billion). Between 2014 and 2024, trade with China grew by 64%, while GCC-EU trade rose only 7% and GCC-U.S. trade declined 35%. This reflects China’s rising demand for oil and manufactured goods alongside the U.S. transition toward energy independence.

Saudi Arabia lies at the center of this shift. In 2024, Saudi-China trade hit $107 billion, surpassing its combined trade with the EU and U.S. Long-term trends underscore this divergence: from 2000 to 2024, Saudi-China trade grew at a 15.9% CAGR, compared with just 4.5% with the EU and 1.0% with the U.S. Meanwhile, U.S.-Saudi trade fell by 65% from 2012 to 2024, reflecting a collapse in U.S. crude oil imports from the GCC—down 83% since 2003 due to the Shale Revolution.

Despite declining trade, financial ties with the U.S. remain strong. As of late 2024, Kuwait, Saudi Arabia, and the UAE together held $1.11 trillion in U.S. financial assets, mostly in equities and Treasury securities. This underscores a dual-track strategy: trade and energy flows are pivoting toward Asia, while capital investments remain anchored in the United States. The result is a more diversified and strategically flexible global posture for the GCC.

Over the past two decades, the Gulf Cooperation Council (GCC)—comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—has undergone a profound shift in its global trade orientation. Once heavily reliant on the United States and the European Union as primary economic partners, the GCC has increasingly turned toward Asia, and especially China, as the center of gravity for its external trade and investment relations.

GCC-China Trade Surpasses the West

China overtook the United States as the GCC’s largest trading partner in 2009 and surpassed the European Union in 2013. By 2024, total GCC-China trade had reached $288 billion, exceeding the combined value of GCC trade with the EU ($173 billion) and the U.S. ($77 billion). Between 2014 and 2024, GCC-China trade surged by 64%, compared with only 7% growth with the EU, while trade with the U.S. fell by 35%.

This realignment reflects multiple structural forces: the U.S. pivot toward energy independence, China’s rising demand for oil, and Beijing’s growing dominance in global manufacturing. Together, these shifts have encouraged Saudi Arabia and other GCC members to deepen ties with Asia—both as a secure market for energy exports and as a source of industrial goods, technology, and investment.

Saudi Arabia at the Center of the Shift

As the GCC’s largest economy, Saudi Arabia has been pivotal in this transformation. China has emerged as Saudi Arabia’s top trading partner, while Saudi Arabia is now China’s leading trade partner in the Middle East and its second-largest supplier of crude oil worldwide. In 2024, Saudi-China trade reached $107 billion, far surpassing Saudi trade with the EU ($75 billion) and the U.S. ($26 billion).

The long-term trajectory is even more striking. From 2000 to 2024, Saudi-China trade expanded at a compound annual growth rate (CAGR) of 15.9%, soaring from $3.1 billion to $107 billion. By contrast, Saudi trade with the EU grew at a 4.5% CAGR, while trade with the U.S. rose by only 1.0% CAGR over the same period. These figures highlight the rapid diversification of Saudi Arabia’s global trade portfolio, with China at the forefront.

Declining U.S.-GCC Trade

While trade with China has boomed, U.S. trade with the GCC has sharply declined. Between 2012 and 2024, U.S.-GCC trade contracted by 39%, from $126 billion to $77 billion, even as overall U.S. trade with the world expanded by 40%. This reduced the GCC’s share of total U.S. trade from 3.3% to 1.4%.

The steepest decline occurred in Saudi Arabia, where trade fell by 65% from $77 billion in 2012 to $26 billion in 2024. Saudi Arabia’s share of U.S. global trade dropped from 2.0% to 0.5%, diminishing its long-standing role as Washington’s main Gulf trade partner. By contrast, U.S. trade with the UAE rose from $25 billion to $35 billion, reflecting the UAE’s role as a regional trade intermediary, particularly in commerce linked to Iran, Iraq, and Russia.

The U.S. Shale Revolution and the Collapse of Oil Imports from the GCC

The most decisive factor in declining U.S.-GCC trade has been energy. U.S. crude oil imports from the GCC have plummeted since the early 2000s. At their peak in 2003, GCC exports to the U.S. reached 2 million barrels per day, accounting for 20.5% of U.S. crude oil imports. By 2024, this figure had collapsed to 330 thousand barrels per day (5.1%), a decline of 83%.

This decline is directly linked to the U.S. Shale Revolution, which transformed the United States into the world’s leading oil producer and sharply reduced reliance on Middle Eastern imports. From 2003 to 2024, U.S. crude oil imports overall fell by 32%, but imports from Canada surged by 163%, making Canada the source of 62% of all U.S. crude oil imports by 2024.

Saudi Arabia remained the dominant GCC oil supplier to the U.S., accounting for 84% of GCC crude shipments between 2005 and 2024. Yet by 2024, Saudi crude made up only 4.1% of total U.S. crude imports, underscoring the collapse of the once-central oil trade relationship.

GCC Investments in U.S. Financial Markets

Despite the decline in trade and energy flows, financial linkages remain robust. As of December 2024, Kuwait, Saudi Arabia, and the UAE collectively held $1.11 trillion in U.S. financial assets. The majority—$776 billion (70%)—was invested in corporate equities, followed by $280 billion (25%) in U.S. Treasury securities and agency bonds, and $54 billion (5%) in corporate and other bonds.
Among the three, Kuwait led with $456 billion in U.S. assets, followed by Saudi Arabia with $371 billion and the UAE with $282 billion. Their combined share of global foreign holdings of U.S. assets has remained stable at around 3.3% over the past five years, suggesting that while trade ties are shifting eastward, Gulf states still view U.S. financial markets as a safe and profitable destination for capital.

Conclusion: A Strategic Realignment with Global Implications

The GCC’s trade realignment from the U.S. and EU toward China represents one of the most significant structural changes in global trade over the past two decades. Driven by energy market shifts, the rise of China as an industrial and energy powerhouse, and the U.S.’s declining dependence on Middle Eastern oil, Gulf states—especially Saudi Arabia—have pivoted toward Asia.

Yet this realignment is not absolute. While trade flows increasingly favor China, financial investments continue to tie GCC economies to the United States. The result is a dual-track strategy: trade and energy with Asia, finance and capital with the West. This balance allows GCC states to diversify their global partnerships while preserving strategic flexibility in a multipolar world economy.